Invited presentation: Global brands or global blands?

© 2000 Blackwell Science Ltd J Consumer Studies & Home Economics, 24, 2, June 2000, pp85–93 | 85

Invited presentation: Global brands or global blands?

Alan Mitchell

retailer Asda, for example, is widely seen as firing thestarting gun in a race of global consolidation amongretailers. The merger of French retailers Carrefour andPromodes was just the first of many. For example, Ceesvan der Hoeven, CEO of Royal Ahold, the Dutchretailer which now has 70% of its sales in the US,recently revealed he had an acquisition ‘hit list’ of 12companies around the world.

Business people have talked about globalization andglobal brands for a long time now. But for most com-panies in most industries, such as packaged goods, onlyrecently have would-be global players begun to believethey have everything to play for.

Why should globalization only become a reality forthese companies now? The answer is that they areresponding to a combination of three hugely powerfulforces which are combining to transform the businessenvironment: political, economic and technologicaldevelopments.

In the political arena, the most important driver ofglobalization has been the collapse of communismwhich, coupled with a worldwide trend towards dere-gulation and privatization has opened vast new markets.In pure population terms former communist countrieslike China and deregulating countries like India offercorporations a glimpse of almost unthinkably huge newmarkets. For example, China’s population is around 1.2billion; India’s is 880 million. But they are just the giants.Territories such as Vietnam or Venezuela are as big – inpure population terms – as many brands’ original hometerritories.

For companies facing stagnant, saturated markets and under intensifying pressure from shareholders todeliver earnings growth, these numbers are too com-pelling to ignore.The race to ‘conquer’ new markets hasjust begun: sales per head of most consumer goods inthese countries is usually just a tiny percentage of whatthey are ‘back home’. For example, in 1996 annual percapita consumption of Coca-Cola products was around

Introduction

Suddenly, among consumer goods companies aroundthe world, ‘globalization’ has become a major buzzword.Take Procter & Gamble (P & G), one of the bluest chipconsumer brand producers. It has been selling brandslike Ariel, Tide, Pantene and Pampers internationallyfor decades. But only in the last year or so have P & Gconsciously and deliberately tried to remold itself as a‘global’ company selling global brands.

A root and branch reorganization, begun in early 1999gets rid of old business units, which were based on geo-graphic regions, to create a new structure built aroundproduct lines such as baby care, fabric and home care,feminine protection and so on. A new structure will, ithopes, will make it much faster in spotting and seizingbusiness opportunities, wherever they arise, in whateverpart of the world. So significant is this reorganization inP & G executives’ eyes that CEO Durk Jager describesit as ‘the most dramatic change to P & G’s structure,work processes and culture in the company’s history.’1

Meanwhile, P & G is busy reshaping its brand port-folio, selling brands which it believes do not have globalpotential, and buying others such as Tampax (feminineprotection), Eukanuba (pet food) and Recovery Engi-neering (domestic water filters) which it thinks do haveglobal potential. Everything P & G does is now judgedinternally by its global potential.

Over the past few years, a whole series of major consumer goods companies – such as Heinz, KimberlyClark, Nestlé, Unilever and Electrolux – have an-nounced similar reorganizations and/or brand portfolioreviews. And consumer goods retailers are not farbehind, whether in clothing, such as The Gap, or in groceries. Wal-Mart’s recent acquisition of UK grocery

CorrespondenceA. Mitchell, 121 Abbeville Road, London SW4 9JL, UK.

Global branding • A. Mitchell

five in China and three in India, compared with 363 inthe US. If Coca-Cola managed to get per capitas up tojust one-tenth of US consumption, it’s volume saleswould be multiplied many times over.2

The second big driver is technology, especially newinformation and communication technologies which are‘making the world a smaller place’ and making com-munication and organization on a global scale truly costeffective for the first time. It is now a commonplace tonote that trillions of dollars of hot money now flowsaround world financial markets on a 24-h basis lookingfor the best deal. Likewise, global communications is increasingly an everyday matter, both creating the preconditions for, and a need for, global brands. WhenManchester United beat Munich Bayer at the EuropeanCup Final in May 1999, the match was beamed to 200countries. We now watch wars in real time, courtesy ofCNN.

The third big driver is economics. Organizations that‘go global’ successfully, can reap huge benefits fromglobal economies of scale. The classic multinational cor-poration is built around a series of local operating units.This makes good marketing sense because each localoperating unit is ‘close’ to its customers, and can do the things its customers want. But it also creates vastamounts of duplication: each country has its local headoffice, its local factories or warehouses making and distributing goods with local specifications, promoted bylocal marketing departments and advertising agencies,and so on.

Simply by eliminating these sources of duplicationand by creating new economies of scale – in sourcing, R& D, distribution, production – globalizing companiescan reap significant benefits.

For example, P & G can achieve almost instantgrowth in the sales of newly acquired brands such asTampax and Eukanuba simply by pushing them throughits existing distribution channels. By reducing thenumber of ketchup bottle designs in Europe from 24 to12, Heinz hopes to save $5 million annually in produc-tion costs. On a grander scale, it hopes to save $200 mby recasting its production operations across the globe;closing or selling one-third of its factories in Europe andcreating global and regional ‘centres of manufacturingexcellence’.

Marketing communications is also ripe for rational-

ization. For many branded goods companies, market-ing communications is now the biggest single-line itemwithin their total budgets. And going global with abrand can eliminate enormous amounts of duplication:on designs and packaging, advertising and mediabuying, and so on.

Meanwhile global media events such as the Olympicsand the football World Cup create massive new adver-tising and promotional opportunities for brands – butonly for global brands that are really able to realizethese opportunities.When Mars changed the name of itschocolate bar Marathon to Snickers, for example, fewUK consumers could see the point of it. Why get rid ofa well recognized – and liked – brand name and replaceit with a name that sounds like a cross between a pairof sneakers and a dirty laugh? But for Mars, the logicwas impeccable. It would not have been able to realizemany of the communications benefits it got from Snickers’ sponsorship the 1996 football World Cup if it still had a whole lot of Marathons scattered aroundthe world.

But marketing moves like this raise a fundamentalquestion about globalization: who is it really for? If mar-keting is supposed to revolve around finding out whatconsumers want and giving it to them, are consumersreally crying out for global brands? Or, are globalbrands being created and marketed, not because con-sumers want them, but because companies want themfor their own internally focused financially driven oroperations-driven reasons? Where, in other words, doconsumers actually fit into all of this?

The two types of global brand

From the consumer point of view, there are two basictypes of global brand. The first is where ‘globalness’ isin some way a powerful plus for the consumer.

In shipping or air transport, for example, it is of realvalue to the customer that he can move goods or peoplefrom A to B simply, without having to deal with a widerange of different operators dealing only with specificlegs of the journey.Twenty years ago, air lines’ main rolewas as a national carrier, transporting to and from theirhome base. British Airways served the British market;Lufthansa served the German market, and so on. Butnowadays, German ‘flyers’ want to fly around the world,

86 | J Consumer Studies & Home Economics, 24, 2, June 2000, pp85–93 © 2000 Blackwell Science Ltd

A. Mitchell • Global branding

so Lufthansa has embedded itself within the StarAlliance, which brings together many airlines fromacross the world. This enables any customer to fly vir-tually anywhere through their network with minimumhassle: an offer of real value.

Alliances such as the Star Alliance need global tick-eting systems to work effectively. And it is not accept-able for the supplier of such a system to say, ‘sorry, wecannot supply you with the computing infrastructure inIndonesia because we don’t operate there’. Similarly if you are a management consultant like McKinsey,or an international advertising agency group like Ogilvyand Mather, advising the alliance or its ticketing systemsupplier, you have to be able to serve the client effi-ciently in all their key markets.And if you are consumerpaying for that ticket, having a credit card such as Visaor MasterCard which works virtually anywhere in theworld – at even the most exotic holiday locations – is areal plus.

Yet, in most cases, the up-front benefit of ‘globalness’is restricted to business-to-business markets. For mostconsumers, the need for global brands is pretty small;the direct, up-front value of globalness is low, zero oreven negative.

For an everyday brand like KitKat for example ‘glob-alness’ is hardly an issue. If I, as a consumer, see KitKatwhen I’m abroad I might appreciate the comfort thisgives me. But in terms of Nestlé’s total business and myoverall attitude towards the brand, its globalness hardlyenters the equation. It is certainly not why Nestlé wantsto globalize the KitKat brand: Nestlé wants the brandto go global because it thinks it can sell more chocolatebars to more consumers in more markets.

Similarly, it does not matter at all to a housewife inActon that a housewife in Azerbaijan uses the samebrand of washing powder, as both Unilever and P & Gknow. And often, when marketers try to standardize abrand on a global (or even regional) basis they riskalienating the brand’s consumers. It is a perennial chal-lenge for would-be global marketers to find a commonplatform in such a way that product specification, pack-aging, brand name or advertising works equally well inevery market.

That is why, in marketing circles, there are endless dis-cussions as to how to reconcile global brand strategieswith local cultural and market differences. The dilem-

mas are well known. In the west, the colour white standsfor purity, for example. But, in India it represents death.For numerology obsessed Chinese, selling a Volvo 440is selling ‘Volvo Bad Luck’. The French insist on havingseparate compartments in their fridges for shellfish andfor fish. Some European markets want top-loadingwashing machines, others side loading.

Knowing when and where to ignore local differencesin the quest for global synergies is one of modern mar-keting’s great skills. But the very need for such a skillunderlines the fundamental point. In most cases, con-sumers do not positively want global brands. So why dothey buy them?

The answer, of course, is that the economies of scalegenerated by genuine globalization enable companiesto offer better quality goods at lower prices. Consumersdo not want global brands because they are global,but because they deliver better value than their localcompetitors.

The controversial result of this line of thinking wasstated most clearly by Harvard Business School mar-keting guru Ted Levitt nearly 20 years ago. Still, mar-keters are flinching and flailing at its implications. The‘republic of technology’ he declared, ‘drives everythingrelentlessly towards global convergence for better orworse – toward the alleviation of life and the expansionof discretionary time and spending power.’3

Despite endless local market differences, most humanneeds and desires are universal. We all get hungry andthirsty.We all like a machine that washes our clothes forus; that transports us from A to B safely and quickly;that helps us communicate with each other or entertainone another. And companies which sell the best conve-nience foods, washing machines and washing powders,cars and flights, telephones, TVs and so on, at the lowestprice, will always find an eager global market.

In fact, Levitt suggested, too often local brand managers fret unnecessarily about what local con-sumers want. So much so that they are often part of the corporate problem rather than the solution. The traditional multinational’s ‘accommodating mode tovisible national difference is mediaeval’, he declared.‘And so are its offerings and its prices . . . The idea of aline of products tailored to each nation (is) dumb . . .thoughtless’.3

Marketers hide behind concepts like ‘find out what



the consumer wants and give it to them’ as an excusenot to ‘press properly for global standardization’, hecontinued. The real role of the global corporation is to ‘orchestrate commercially the irresistible vectors of technology . . . into benign benefactions for all theglobe’s inhabitants . . . to hasten the consummation ofwhat already occurs, to force suitably standardized prod-ucts and practices onto the entire globe, because that isindeed, exactly what the world will take, especially whenaggressively low prices are linked to quality and relia-bility.’ (My emphasis)4

Of course Levitt was far too subtle a thinker to reallypropose completely blanket, forced, standardization.‘More and more, people everywhere are growing morealike in their wants and behaviour’, he insisted. Butwhere there are real differences, it is ‘obviously unten-able’ to ignore them: ‘global convergence does notsuggest the total homogenization of everything every-where’.5

The marketing challenge therefore remains: how toaccommodate local market differences and preferenceswithin a global strategy that still delivers as many ofthose global economies of scale as possible.

Increasingly, companies’ response is to push global-ization at different levels according to different circum-stances. One of the most common ways of doing this isthe ‘platform’. Car companies nowadays do not designand develop different cars for different countries. Theystart out with a global and/or regional perspective anddevelop global platforms – chassis, engine, suspensionsystems, etc. – which they can tweak relatively cheaplyand easily for local markets: left-hand drive for the UKfor example.

Products can also acts as global platforms, even if theysell under different brand names.Walkers Crisps sells asLays in most other countries of the world. Wall’s icecream in the UK will be Igloo in Germany. Likewise,General Motors will brand exactly the same car a Vaux-hall in the UK and an Opel in Germany. In each case,the product itself is global, so technologies, know-howand infrastructure economies of scale can reaped. It isonly at the relatively superficial level of brand commu-nication that differences are accommodated.

On the other hand, a global brand can act as a plat-form, even although the brand itself is expressed in mar-keting communications in different ways according to

local conditions. Coca-Cola is a global brand but Coca-Cola marketing campaigns – including advertisements –are increasingly tailored for local audiences. In Mexico,for example, Coke is sold more as a food (because of itshigh sugar content); whereas in the UK the associationis more to do with fun and experience. In China, Coca-Cola has chosen pop singer Ang Mei as one of itsbrands’ spokesmen – and one of the reasons Ang Meiis popular in China because she does not sing in English.She only sings in Mandarin Chinese. She is a local,standing up for local culture.

The process can work the opposite way, too. Nescafeis marketed as a global brand. But the actual coffee ina jar of Nescafe will be very different depending onwhether you buy it in Japan, Spain or England. Like-wise, every car coming off the Mercedes Benz produc-tion line in Sindelfingen in Germany, for example, isunique. The brand is global, but the product totally cus-tomized to each buyer’s specifications . . . on the basisof a global platform. The potential permutations andcombinations of these different infrastructure, technol-ogy, product and brand platforms are endless.

Nevertheless, all the incentives, opportunities pointinexorably in the same direction: if a company cancreate global platforms and global products and globalbrands, then it can achieve economies at every level.And that gives it a real advantage. As Levitt com-mented, globalization based on standardization is ‘flattening the mountains’ of national differences, and‘companies that don’t try to push the rock across whatis becoming a flatter competitive field will themselvesbe flattened.’6

No wonder globalization and global brands makes somany people – including marketers and brand managersthemselves – feel uncomfortable. But, given this pres-sure to globalize at every level – of platform, product,brand and brand expression – is this a good thing or abad thing for consumers?

The downsides are well aired. They revolve aroundthemes such as homogenization, Americanization, athreat to democracy, exploitation of ‘Third-World’countries and labour, and increased inequality. Accord-ing to its critics, globalization does not produce many‘benign benefactions’ for the globe’s inhabitants at all.It starts with producer push and it ends with producergain. Full stop.



For example, the critics argue, the forces of global-ization are standardizing forces. If globalization goesunchecked, local identities, languages and cultures willall be swept aside in one huge rush of homogenization:what futurist Watts Whacker calls a ‘single global iden-tity’. Globalization, fear the critics, is about the triumphof the lowest common denominator: the triumph ofglobal blands not global brands.7

Worse, say the critics, globalization is actually just a euphemism for something even narrower and lessenlightening. Globalization is simply another word forAmericanization.

Table 1 shows a list of top 50 global brands, as com-piled by marketing consultancy Interbrand. As ever,there are grounds for disputing the detail of such rank-ings. It seems odd, for example, that Harrods – with justone shop in one country – should be classed among theworld’s leading global brands. But one of the criteria forthe Interbrand rankings is not just global presence, butglobal potential.

Even accepting such quibbles, the general message isclear. Most global brands are American – two-thirds ofthem, in fact. The next closest contender, with just five,is Japan: Sony, Nintendo and Sega, Toyota and Toshiba.Next among the contenders is the UK, with four brands:Body Shop, Cadbury, Harrods and the BBC.

And of course, the top three – McDonald’s, Coke andDisney – are the source of much cultural controversy.According to the critics, the onward global march ofbrands such as these boils down to nothing less than the relentless spread of junk food, junk drink and junkculture. Add in other icons of ‘the American way of life’such as Levi’s, Marlboro, Nike, plus of course, Microsoftand IBM and what you are really observing is globalAmerican dominance; American economic and culturalimperialism in a new guise.

Some see even more sinister implications. Themodern global organization has achieved such a gar-gantuan scale that it is becoming a law unto itself, fearthe critics. Nowadays, for example, in excess of 70% ofworld trade is managed by 500 corporations and 70 cor-porations are now bigger than nation states. GeneralMotors’ annual sales revenues are now roughly equal to the combined Gross National Product of Tanzania,Ethiopia, Nepal, Bangladesh, Zaire, Uganda, Nigeria,Kenya and Pakistan.

Whereas, 20 years ago, governments could tell com-panies what to do, increasingly companies effectivelytell governments what to do. For example, nationscompete with each other to ease up taxation and labourpolicies, to deregulate in favour of global corporations,as part of a bidding process between countries for multi-national investment. Today, it is global corporations, notnations, that dictate the economic and political agenda.

And if many of the pressure groups are to bebelieved, these corporate Leviathans’ main agenda isnot be to spread the ‘benign benefactions’ that Levitttalked about: but to exploit the poorest and weakestmore efficiently and effectively – on a global scale. Formany years now, for example, Nike has been the subjectof protests from human and labour rights organizations,who claim that the workers in its plants around theworld are consistently ill-treated and exploited toinhuman degrees.

Many Gap garments are made in a string of 170textile factories along a road towards Phnom Penn,Cambodia where the workers are paid less than $1 anhour, with compulsory overtime (on pain of dismissal).This means they work 7 days a week. And human rightscampaigners claim that some workers are beaten withsticks if they complain.

But the Cambodian government is wary of doing too


Table 1 Top 50 global brands

1 McDonald’s 18 Apple 35 Pillsbury2 Coca-Cola 19 BMW 36 Reebok3 Disney 20 Amex 37 Cadbury4 Kodak 21 Tampax 38 Camel5 Sony 22 Nintendo 39 Chanel6 Gillette 23 Lego 40 Swatch7 Mercedes-Benz 24 Ikea 41 Harrods8 Levi’s 25 Sega 42 Colgate9 Microsoft 26 Harley Davidson 43 Toshiba

10 Marlboro 27 Intel 44 Mars11 = IBM 28 Body Shop 45 Ford11 = Nike 29 KFC 46 Time13 Johnson and Johnson 30 Heinz 47 Barbie14 Visa 31 Toyota 48 Rolex15 Nescafe 32 Xerox 49 Lucky Strike16 Kellogg 33 CNN 50 BBC17 Pepsi-Cola 34 Adidas

Source, Interbrand.


much to improve conditions there because ‘The gar-ment industry is our leading export sector. We want tosee it put down deep roots to support other sectors ofthe economy.’ And Chang Po Van, one of the biggerfactory owners, says he cannot afford to increase wagesbecause – quote – ‘The average salary in Cambodia is30–50% higher than in Indonesia.’ In other words, lowerprices on Gap T-shirts in the US and the UK are boughtat a very high price indeed: at the expense of otherpeople’s lives, in other poorer countries of the world,where human lives come cheap.8

Thus, argues Subcomandante Marcos of the MexicanZapatista movement, ‘globalization is merely the total-itairian extension of the logic of the finance markets toall aspects of life’; where these financial markets ‘oper-ating for their offices and answerable to nobody butthemselves, have been imposing their laws and world-view on the planet as a whole.’9

Echoing these sentiments in his book Turbocapital-ism, US academic Edward Luttwak warns that moderncapitalism’s globalization is actually very similar toSoviet communism in one crucial respect. ‘It, too, offersbut a single model and a single set of rules for everycountry in the world, ignoring all differences of society,culture and temperament.’10

So, the argument goes, what globalization is reallydoing is creating a ‘winner take all’ – and a loser loseeverything – economy. Some individuals like Bill Gatesare now worth more than entire nations. Yet, 1.3 billionpeople still have incomes of less than one dollar a day.And the divide is deepening. According to a recentreport from the United Nations Development Pro-gramme in 1960, the richest 20% across the world were30 times richer than the poorest 20%. By 1997, therichest 20% were 74 times richer than the poorest20%.11

The critics have certainly got a point. And all the evi-dence suggests that public recognition and support fortheir arguments is growing. World trade negotiationsare now the subject of intense lobbying and protestsfrom so-called NGOs (non-governmental organiza-tions), with such effect that some senior figures fear theycould derail what they see as progress towards a globa-lized economy.

On the other hand, a world dominated by globalbrands and superpowerful global brand producers is notimminent yet.

First, it is easy to forget how young global brandingreally is. Coca-Cola, the archetypal global brand, onlyreally got into its global stride during the Second WorldWar. Most of the brands listed in Table 1 only began toglobalize over the last few decades, and for manyprogress has been patchy, to say the least. For example,Pepsi ranks 17 among the top 50 but 80% of its sales arestill made within the US. Likewise, 90% of Heinz’s totalprofits (ranked 30) come from just six countries: the US,UK, Italy, Canada, Australia and New Zealand.

Indeed, the most comprehensive study of the devel-opment of global brands in packaged goods – by twoUS academics, Betsy Boze and Charles Patton – showsthat for major branded goods producers, only a tiny proportion of brands can be classed as anything close toglobal.

Boze and Patton defined a brand as ‘global’ if it soldin more than a half of the 67 countries they studied: adefinition which makes a brand ‘global’ if it sells in justone in six of the world’s separate nations. The results oftheir research showed just how limited the rise of theglobal brand is.

Over a half of all the brands sold by major playerssuch as Unilever, Nestlé, Kraft, Colgate, and Procter andGamble were sold in just one in three countries. Mostof the rest were sold internationally – in 4–33 countries– but did not clear the definitional hurdle of ‘global’.12

Looking at the process of globalization more broadlyit becomes clear that some industries such as oil (whichwas always a global industry, almost by definition) oraviation or computing (where the technology is univer-sally applicable and where economies of scale favourglobalizers) are ‘naturally’ suited to globalization, whileothers are less suited.

For many industries such as consumer financial ser-vices and retailing globalization is only getting startednow, and only then in relatively small ways. For example,only now are retailers like Wal-Mart, The Gap, Car-refour, Royal Ahold and Tesco trying to go global andtheir progress is slow.

There are also a number of powerful forces that are either working against the trend of globalization orworking to alleviate its effects. For example, the veryglobal media that makes global brands possible is alsohighlighting the abuses of cheap labour that have takenplace and companies like Nike and Gap have beenforced to respond with policy changes.



Of course, campaigners say they should go muchfurther, much faster. But on the corporate side animportant lesson is being learned. As brands go globalthey need to win the trust of consumers on many morefronts at higher levels: the greater the potential influ-ence of a corporation or brand the more that is expectedof it.

For example, a company that is exposed as using childlabour to help boost its profits, sends very mixed brandmessages to its consumers back home. There is many amum and dad who are likely to think ‘if they are the sortof people who are willing to exploit those children forthe sake of quick buck, then they are probably the sortof people who would exploit my children too. So I amnot too sure I really trust them.’ Developments like thismean the focus of trust is shifting, from trust in theproduct (will it do what it promises to do?) to trust inthe people behind the product (are they the sort ofpeople who would do the right thing?)

In this way, globalization is changing the brandingagenda for the biggest of global companies. Ethics andsocial responsibility and so on are not going to go away.They are changing what it takes to build a global brand:they are the ‘price’ of going global.

There is also another side to the whole issue of cheap labour and exploitation. The more global cor-porations outsource production to ‘cheap labour’ areasin the Third World, the faster they drive these territo-ries’ economic development. Take just one example.Today, few consumers would be tempted to buy a computer branded ‘Great Wall’ and made in China,especially when placed next to the reassuring quality ofan IBM.

But how would – how will – their attitudes changewhen they find out that the IBM computer whosequality they are completely confident, is actually madeby Great Wall in China? This line of thought is prompt-ing executives in the Great Wall Computer Corpora-tion, which makes IBM-branded computers for IBM,into branching out to building its own brand. Their rea-soning? If their quality and reliability is good enoughfor the IBM brand, then it is good enough to build theirown brand: to get some of IBM’s kudos for themselves,along with the margins such kudos brings.

This is not a rare exception. It is almost becoming therule. Acer, now a major PC brand in the US, started outthis way. A number of Chinese mobile telephone brand

manufacturers are following the same route, enteringinto direct brand competition with the brands they manufacture for.

Indeed, it is not unreasonable to predict that many oftomorrow’s leanest, hungriest, up and coming wannabeglobal branders won’t be western corporations sellingto less developed nations, but brands originating indeveloping nations flexing a new found economic andtechnological muscle.

For example, Tata, the massive Indian conglomerate,has set its sights on Nestlé’s, Kraft’s and Unilever’s dom-ination of the world tea and coffee markets. It has manystrengths which actually give it competitive a edge overthese high cost western producers, it argues. Anotherexample, is Chef Kang noodles – the biggest instantnoodle brand in China. It’s already a huge brand in itshome market: so big that Campbell’s the US soup gianttried to buy it. But it lost the bidding to a Chinese globalwannabe, President Enterprises.

What then, about Americanization? The spread ofAmerican culture is there for all to see. But there is alsoevidence that the most advanced American global com-panies are realizing that Americana is a constraint anda weakness for a would-be globalizer, not a strength. Afew years ago, pundits liked to talk about the MTV gen-eration, born and bred on a diet of American cultureand pop music. Since then, MTV has localized itscontent to win local audiences and America’s share ofthe world music market is declining inexorably. In 1987,American pop groups commanded a 50% share of theworld’s pop music sales. Nowadays, it’s closer to 20%and falling, with 70% of most countries’ music salesgoing to local artists.

Being truly global means having no particular affiliation to any country or culture, the argument goes. Only then can you truly connect with local mar-kets in what management guru Kenichi Ohmae calls ‘insiderization’: becoming so embedded in local marketsthat locals see the company as local. For example, manyBritish people see Ford and Heinz as British companiesand brands, despite their American ownership.13

That is why companies like McDonald’s are playingdown their American roots, employing local advertisingagencies to deploy local British sense of humour in adsto ‘embed’ McDonald’s in a British way of life. That’swhy, in China, the Coca-Cola company signed up popsinger Ang Mei as one of its brands’ spokesmen (see



above). As Time Warner chief executive Gerald Levincommented recently, globalization ‘is not about takingAmerican culture and pushing it around the world. It isreally about trying to take the ethnic diversity we havein the world and give it expression.’14

Homogenization, also remains an open question.What exactly does happen when cultures and lifestylesmeet and clash? Do they fold into a great big meltingpot to come out a uniform grey? Or do they, as thinkerslike futurist Alvin Toffler and complexity theorist StuartKauffman argue, actually spawn even more complexityand variety?15

In the UK, consumers have grown to like Chinese,Indian and Italian food, but they also still like roast beefand fish and chips. These ‘global’ influences have madeconsumer choices more complex, not more simple or more standardized. Chicken Tikka Massala, forexample, is the most popular curry dish in the UK. Butit is unknown in the Indian subcontinent. It is a fusionproduct, created by curry chefs in England to pander tothe English desire for ‘gravy’.

Finally, there is the economic argument. Globaleconomies of scale may be crucial in technology-driven,product-based manufacturing industries. But most adv-anced industrial economies are moving away from man-ufacturing towards services. And whole swathes of theireconomies – such as nursing, getting a bus or train towork, teaching, cooking in a restaurant, building, gettinga baby sitter or plumber – simply do not lend themselvesto global economies of scale or to global branding.

In fact, according to economist Paul Krugman, thebiggest growth area in terms of employment is those‘kinds of activities that we can’t program a computer orrobot to do for us, that require the human touch, (that)also typically require direct human contact . . . That’swhy most people in Los Angeles produce services forlocal consumption, as do most people in New York,London, and Paris.’ We have not got globalization, hesays. We’ve got ‘globaloney’.16

So, putting these varied, complex and conflictingtrends together, what picture emerges? How does thecorporate drive to globalize and to build global brandsfit in with consumers and their needs? Here is a sug-gested perspective.

First, Ted Levitt was right. Wherever the ‘republic oftechnology’ and economies of scale in production, dis-

tribution or marketing communications are the decisivefactors, the overriding logic is towards globalization, andwithin that, global brands will play an increasinglyimportant part. And yes, this process is only really justbeginning.

But consumers will buy these global brands, notbecause they are global, but because the organizationbehind them has found a way of using the benefits ofglobalization to deliver better value – the benign bene-factions Levitt talked about. If they fail to do this, theirattempts to ‘go global’ will fail. And many will failbecause, while the lure of globalization is strong, theactual difficulties of creating the right structure, theright culture, etc. are huge. The fact that synergies aretheoretically available does not mean that everyone hasthe skill to realize them.

There are also large – and perhaps growing areas –where there are not any real economies of scale – thelocal services that Krugman talks about. In these areaslocal brands will continue to flourish: the tide of globa-lization won’t sweep every walk of life.

Indeed, often it will be these local brands represent-ing local products and services that grab the largestshare of consumer spending – and of consumers’ heartsand minds.

This last point is important. Consumers may chooseto drive a Honda or a Ford or use Ariel washing powderand buy the odd packet of Pringles crisps – and thesedecisions matter enormously to the likes of Honda, Fordand P & G – but how important are these brands to con-sumers’ lives?

The role these brands play in most consumers’ livesis strictly utilitarian. Consumers use these products as aplatform for life; as means of getting the basic choresdone easily and efficiently. But they rarely ‘matter’,emotionally. Yet increasingly the brands that matter toconsumers are the ones that matter emotionally. What,for example, would that Top 50 list look like if otherforms of brand were included – such as the OlympicGames or the football World Cup; or Tiger Woods,Madonna, or the Spice Girls; or Manchester Unitedfootball club, or Greenpeace?

These are brands which have gone beyond havingmere ‘consumers’. They have created fans, supporters,members and enthusiasts. And they all compete for ashare of consumers hearts and minds – and for a share



of their purses. Indeed, in terms of brand affiliation theyarguably are doing much better than the likes of Kodak,Gillette or American Express.

Meanwhile, by creating a whole set of international‘communities of interest’ – groups of people who sharea passion in anything from orchard cultivation to whitewater rafting – the Internet is poised to change what itmeans to be ‘local’. Soon we may feel more affiliation –feel closer to – someone in the same community ofinterest on the other side of the world than we do to theperson living next door. But this emotional affiliation isbuilt more around shared passions than global opera-tional platforms.

In other words, even as traditional global brands suddenly see a world of opportunity opening up beforethem, most of them also risk being eclipsed as the mar-keting environment changes.

Heated debate about the pros and cons of glo-balization, and of global brands, will continue. Thatdebate should be encouraged. It is one way in whichconsumers – the public – bring their influence to bearon the emerging centres of power within our society.But the environment and the key issues it throws up areevolving very rapidly indeed. So rapidly that there is onething we can be almost 100% sure of: the biggest, mostinfluential global brands a decade or two from now willbe different to the ones we see today.

References

1. Jager, D. (Chief Executive) (1999) Procter & Gamble,Statement to Analysts, June 9.

2. Coca-Cola. (1996) Annual Report.3. Levitt, T. (1986) The globalization of markets. In The

Marketing Imagination, pp. 37. The Free Press, NewYork.

4. Levitt, T. (1986) The globalization of markets. In TheMarketing Imagination, pp. 39. The Free Press, NewYork.

5. Levitt, T. (1986) The globalization of markets. In TheMarketing Imagination, pp. xiii. The Free Press, NewYork.

6. Levitt, T. (1986) The globalization of markets. In TheMarketing Imagination, pp. xiv. The Free Press, NewYork.

7. Taylor, J. & Whacker, W. (1997) The 500 Year Delta, pp.186. Capstone, Oxford.

8. (1999) Cambodia garments boom comes at a price.Reuters, Aug. 16.

9. Berger, J. (1999) Welcome to the abyss. The Guardian,Nov. 20.

10. Luttwak, E. (1999) Turbocapitalism: Winners and Losersin the Global Economy, pp. 28. Weidenfeld & Nicholson,London.

11. The Human Development Report (1999) United NationsDevelopment Programme. Oxford University Press,Oxford.

12. Boze, B. & Patton, C. (1996). The future of consumerbranding. Journal of Consumer Marketing, 12, 20–41.

13. Ohmae, K. (1990) The Borderless World. Harper Business, New York.

14. (1999) The View fromChina. Fortune, Nov. 8, 113–118.15. Kauffman, S. (1995) An emerging global civilization. In

At Home in the Universe, pp. 292. Viking.16. Krugman, P. (1996) Pop Internationalism, pp. 213. MIT

Press, Cambridge, MA.


Documents

Invited presentation: Global brands or global blands?